Leroy Seafood Group

Welcome to Leroy Seafood Group's second quarter presentation 2026. My name is Henning Beltestad, I'm CEO in Leroy Seafood Group, and with me today I have Sjur Malm, CFO. First of all, I will take you through some highlights in a quarter, then give a short target, a stretchy and target update, then Sjur Malm will take you through the key financial highlights, and then I will come back and take a Short outlook of what we expect going forward. First of all, Lira is a leading global provider of high quality seafood. We have a history reaching back to 1899. Fully integrated value chain, diversified portfolio of healthy products and strong brands served across 80 countries. Listed in Euronext Oslo Børs since 2002 and have the values open, honest, responsible and creative. In total, we have 6,000 employees, a turnover last year of 34 billion nok, an operational EBIT of 2.5 billion nok, and a total process volume of 340,000 ton, and a harvest volume of 195,600, and a wildcatch volume of 57,675. So, we are a seafood company. Our goal is to create the world's most efficient and sustainable value chain for seafood and have a global presence in all major markets around the world. And also at the same time, of course, our sources are mainly coming from the Norwegian coast. We are a fully integrated company and our value chain is our unique position in the seafood market. There is not many companies like Leroy globally today. Supplying salmon and controlling the value chain from row to branded product in the shop and from fishing boats all the way out to our branded products in Shops and Restaurants Highlights of the quarter Strong biological development with positive cost trend in farming Harvest guidance reiterated at 195,000 ton Increased expectation for profitability in the wildcatch Lower margin in market operations compared to last year Tightening market for salmon and trout and the board has proposed a dividend of 2.5 5 NOK per share for 2025 paid out during the quarter. The operational EBIT in the quarter is 574 million NOK compared to 680 million NOK same quarter last year. A short strategy outlook. We had a capital market day in February. and we will every quarter give an update on where we are towards these targets. We have the 220,000 ton target for 2030 in farming. The run rate is around 193,000 ton today. 50 billion NOC target 2030. We are around 34,000 The most important in the short term is the 1 billion NOC reduction in cost. And the run rate for the 2 billion NOC EBIT in market operation 2030, we have a 12-month rolling at the 1.2 billion NOC. But in the short term, the most important is the cost reduction process. As of Q2, we see that we are going in the right direction. We have realized end of the quarter, 402 million NOK and identified and under execution is 521 million NOK. So we have a gap to target of 77 million NOK. So we are really working structure and motivated to achieve this theory goal. Then I will go in and look at the highlights for the different segments. We have three segments, farming, wild catch, market operation, and we start with the farming. It's been a quarter with continued strong biology, low mortality, high harvest weights of 4.8 kg compared to 4.7 kg last year, high quality, but some moderation on growth, which has affected the price achievement. The prices in line year on year, the SSI price, second quarter 26 of 2020, Yeah, close to 72 NOC is about the same level as same quarter last year. And there has been a quarter with high supply growth. And we see in this segment, we have had a significant quarter-on-quarter cost improvement in farming. And we keep the harvest guidance on 195,000 tons. If we go into the different regions, we start with Lererura. It's a continuous strong biology development, strong growth rates, high survival rates, high superior share, high harvest rates. And the cost is lower compared to second quarter last year and first quarter in 2026. So it's been a good development, even though we expect a little bit higher cost going forward the next quarter. The estimated harvest volume is increased to 55,000 ton and the earlier guiding was 49,000 ton. The operational EBIT value chain is close to 20 NOK and a little bit higher than what we achieved the second quarter last year. Leremitt continues strong biological development, high survival rates, high superior share, high harvest rates, cost lower compared to second quarter 25 and also first quarter 26. Expect a little bit higher cost in third quarter, but the cost 26 is lower than, is expected lower than 25. Estimated harvest volume unchanged at 73,000 ton. Lederskjøtrol, very good development in this area, in this region. Good biological development also here in the second quarter. Strong improvement in survival rates, low seed. The farming cost is per kilo significantly down from first quarter 26 and we expect a lower cost in third quarter and also for the whole year 26 compared to 25. In this quarter, price achievement on trout has been influenced by some maturation. The estimated harvest volume is reduced to 7,000 ton, and the main reason for that is the extremely low sea temperature that we've seen through the summer. Scottish Seafarm. Been a difficult situation in Scottish Seafarm the last couple of years, but we are really coming back Low harvest volumes in second quarter and first half, but have a high volume in second half of the year. The next generation of fish is performing well. Expect significantly higher volumes and a lower cost in coming quarters. The estimated harvest volume is unchanged at 43,000 tons. and if we look at the year to date, 26, we have harvested 13,500 ton compared to 20,000 ton last year. And so we have for second half of the year a volume of close to Farming volumes, the guiding, 52,000 ton, 73,000 ton, no, 52,000 ton in Lerøy Rora, 73,000 ton in Lerøy Midt, and 70,000 ton in Lerøy Kjøtroll, which is 195,000 ton. And our 50% share of Scottish Seafarm gives us around 22,000 ton, and a total of 217,000 ton. We have market operations in 18 countries developed the last 20-25 years. We have sales to more than 80 markets and it's the end part of our value chain. Market operations has been impacted by lower harvest volume and strengthening NOC. Less favorable contract positions than in 2025. The operational EBIT is down to 269 million NOK versus 351 million NOK in second quarter 2025. A strong EBIT margin of 3.5% compared to 2.5% EBIT margin in first quarter 2026 and we expect a good second half of 2026. Wildcatch highlights. Strong performance in second quarter 26, considering quarter. Cash volumes up 6% year-on-year, down 10% year-to-days. Prices significantly up year-on-year. Clear operational financial improvements in land-based industry, and a significant inventory build in the quarter. And we have increased profit expectation for 26 from 350% to 400 and 400 to 450. So a very good performance in the wild catch segment and a positive outlook going forward. And the wild catch quotas and catch volumes, second quarter, 1,500 ton cod, 1,300 ton seet, 3,000 ton haddock, 2,100 ton shrimps and 11,000 ton others, which is a total of close to 19,000 ton compared to 18,000 ton in second quarter last year. And we have remaining quotas of 16,000 ton compared to 17,000 ton last year. Thank you. We'll take you through the key financial highlights.

Yes, thank you, Henning. Then I will sum up what Henning has said into our numbers. So looking at our P&L, we see the key value drivers on the latter line on harvesting volume of salmon and trout. As explained, we've seen low water temperatures in Lære Sjøtoll impacting growth. And that is one factor behind the lower harvest volume. Still, as you know, there's no changes to guidance, total guidance for the year. On margin in this part of our business, which is the sum of farming and market operation, we can see that the margin is slightly down compared to last year. Trying to decompose this, starting with farming, we are pleased to see a significant cost reduction from first quarter to second quarter, around 5 kroner a kilo, and that is very positive. We are seeing the biggest positive contribution and cost reduction in Blæra Kjøtroll, this quarter the smallest in Blæra Midt, but also then when we guide costs in Q3-plattish to slightly up, it's also a reflection of the fact that cost level in Q2 was lower than what we expected going into the quarter. Looking at the price, we have an impact this quarter of the maturation on trout, which was around 10 million kilos of trout in the quarter. And we said that the price impact in our report was around 5 kronor a kilo compared to salmon. Also on the margin side, which is off weighing then the cost production and farming is the fact that we have slightly lower margins in value added or market operation this year compared to last year. So that was that part of the business decomposed. Looking in the wild catch business, I think the key takeaway is the fact that we have a quota on the air. It will vary a bit with time it is actually sold and recorded in our books. This quarter we are increasing our guidance from 350-400 to 400-450, which is then an indication that the business is going better than what we expected a quarter ago. Looking at what was booked this quarter, it is margin not too far from last year, but as written in our report, we have built significantly in entry, which poses well for profitability in this segment in Q3 and Q4. In sum then, operational revenue is down. Key driver there is the lower harvest volume in salmon and trout. You see our operational remittance is slightly down and I will then talk through the key drivers behind that. At our Capital Markets Day in March this year, we talked a lot about capital and efficiency, and that focus we have with us every day. In that light, it is positive to see that our total asset has actually reduced a bit this quarter. Together with activity being at least at the same level as last year. No big changes, worth mentioning is on inventory and also some comments going into second half. As Henning have commented and will comment on outlook, we are seeing a tightening market that could increase together with higher volumes. Will increase working capital in the market operation part. Higher feed cost will potentially increase working capital built in farming, but off weighing this is also the fact that we have a very high inventory of whitefish at end Q2, which will be sold in second half. So that will limit the working capital effect of those factors. This quarter we would like to say we have a strong cash flow, at least 400 million in working capital, and despite paying out 1.5 billion in dividends, the increase in debt is still at 8.4 billion. Catechs, there are basically no changes to this slide compared to last quarter. This is developing according to plan. Key investment areas continues to be new technology in farming and investment program for 2026, the Aquatoss, and Henning will comment on that shortly. We also like to include this slide to support the discussion in Norway showing the ripple effects of our operations in Norway. And so this highlights that ripple effects of leve is impacting the full country. We buy goods and services for 2025 of 20 billion nok. We operate ourselves in 50 municipalities. We have employees which live in 190 municipalities. and the impact direct and indirect in taxes is close to 2 billion in 2025. This is important. This industry is very, very important for Norway. Then, on a capital markets day, we shed some light on key drivers within market operations. Primary processing, which is the slaughtering and pilleting, first step of processing of salmon and trout. Sales and distribution, which is basically where Leve came from, in Halva Leve, which is sales and distribution of seafood globally, both then operations out of Norway, but also our sales offices in different parts of the world. Then we have the consumer product part, which is higher value-added processing of products. For those who would like more input, please see our CMD. I will just highlight some of the key drivers within the market operation this quarter, starting with sales and distribution. We see up to the right, volumes are slightly down compared to last year. Profitability is slightly up. We have healthy cost control. and we are seeing slightly higher margins this quarter than what we have seen in recent quarters. So that was a good quarter. In consumer product, as Henning has highlighted, we are not 100% pleased with the profitability this quarter, which is down from last year. This is driven by, firstly, the fact that we have less favorable contract positions this year, but also we have one unit which had a low profitability level this quarter which will be significantly improved in coming quarter. So we expect as of today significantly higher profitability in this part of our business in 22nd of 2026 and also fair to comment is the fact that you can see that the work on cost is continuing to lower the cost position which is good. Finally, within primary processing, so as said at the Capital Markets Day, we are then moving the all primary processing to be reported within market operation. In one business unit and we believe this will strengthen the competitiveness of our business over time. This is done with effects from 1st of January which is expanding the higher volume and we see that this is a low margin business but it's still then a margin running stable and good business. First off, the impact is around 50 million and we expect further impact from this change to be around 120 million, then moving the reported profit from farming to market operations. Also, as said, within Wildcatch we have a quota for the year. We show this model on the cattle marks day. I would just like to give an update to back why are we now estimating 400 to 450 million in Operational EBIT this year. This is the model, this is development and key drivers and the core driver compared to previous quarter is the fact that volumes are slightly down but also we have then reduced fuel consumption and the fuel price and these are key factors together with continued high prices to why we now estimate profitability between 400 and 450 million on operational EBIT level which is a significant increase from sub-300 million last year. So, then we have a look forward, and I give the word to you, Henning.

Thank you, Sjur. Then I will take a short outlook at the end. We start with the Atlantic salmon supply side. It's, and I think the first thing we should look at is, you know, 2025 numbers and the increase in supply of 12% that year. We see in 2026, we see a global increase of about 3%. But I think most of this Ingrid Sandahl already been taken out in 2026 and I think going forward we will see We also expect a 2.6% increase in supply growth for 2027. So the extreme increase in supply is in a way over. And we also see that the major markets is demanding more Atlantic salmon and especially the overseas markets. And we see running into the summer in July and in August, we also see that the demand is increasing with higher prices than last year's. If you look at the different segments of inlay array, as I said, we have a very strong biological performance and we believe that this will continue. The cost reduction program is progressing as planned. This will significantly reduce the impact of higher feed price, which is expected in 2027. We expect a harvest volume of 195,000 tons this year, and we believe that we have, with the biological improvements that we're doing in the farming value chain, we believe that we are on a good track also for our long-term goals. White Catch price development outweighs lower catch volumes and significantly higher fuel price. A positive operational development in land industry also starting to show in financial. It's really good to see and we believe that this improvement program that has been running in the industry of whitefish is really starting to show results. Market operation, lower salmon and trout prices are building markets. The last couple of years increased demand for integrated sustainable value chain, strong demand in emerging markets, and for the second half of 2026, operational EBIT is expected to be in the same range as H2 2025. and we in the long term, the guidance and long term ambitions repeat in farming 195,000 ton in the short term, cost per kilo lower than 2025 for the whole year 26 and we keep, we believe that we are on a track to 220,000 ton Ivar Wulff, Bjarne Reinert, Hans Kristian-Bognø Ljøen and for 2030 profitability growth with the quota growth as we see that there will be a growth for the expectation for quota is 10% up for Cod and about 17% for Haddock. Marker operations, 26 compared to 2025 continued growth at slightly lower margins and We believe that we also, with the improvement programs in this segment, we also believe that we have a good direction towards the 2 billion NOC EBIT for this segment. Then at the end, I want to dig a little bit into new technologies that we are doing in farming. and we are doing a lot and we have the shielded technology and the submerged farming which we have been a pioneer in the development of this and we are doing laser technology, we are doing semi-closed systems, we are doing Yeah, and the technology improvements and development is really going fast. And now we, especially for this region, which has been historically the most challenging region, we are now investing into closed cages from end of this year. And we have made a small movie showing Thank you very much and enjoy the movie.